BAKU, Azerbaijan, Dec.29
By Tamilla Mammadova – Trend:
Georgian Finance Minister Matchavariani noted that this year the trade balance (difference between the value of a country's exports and the value of its imports) has deteriorated by $700 million and reached $2 billion, Trend reports via Georgian media.
During the presentation of the 2021 state budget, Matchavariani presented various scenarios for reducing debt and deficit.
Based on one of the scenarios, the deficit returns to 3 percent of GDP in 2023, and then drops to 2.5 percent, although the reduction of the deficit is partly at the expense of capital projects, noted Matchavariani.
He said that based on the scenario capital expenditures will fall to 6.5 percent relative to GDP, while the debt ratio will be around 57 percent, noting that ‘it meets the requirements of the law, although it is still high and carries significant risks.’
"If we keep capital expenditures at 8 percent of GDP, in this scenario, the deficit will be up to 4 percent and debt will rise to 63 percent, which will inevitably lead to a deterioration in our ratings and additional pressure on the economy,” he noted.
Under the alternative scenario, in order to reduce the debt to 50 percent of GDP, it is necessary to reduce the deficit to 1-1.5 percent, which, according to the minister, is impossible at the expense of capital projects.
"Consolidation at the expense of capital projects is ineffective. Therefore, an alternative strategy is needed to reduce the debt,” said Matchavariani.
He said that reducing current expenditures is impossible, as Georgia has one of the lowest current expenditures among European and CIS countries and the only way of fiscal consolidation and debt reduction is to mobilize additional resources.
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